Consider the following statements about the Hawala System and identify the correct one s 1 Hawala is...........

Economic Affairs World Trade Organsiation (WTO)

Consider the following statements about the Hawala System and identify the correct one/s.

1. Hawala is an ancient system of money transfer in which there is no physical movement of cash.

2. Hawala has been declared illegal in India as it is only used for illegitimate means like money laundering and terror financing.

3. However, WTO recognises and supports Hawala to improve financial inclusion of Least Developed Countries.

Select the correct answer using the code given below.

1 only

2 and 3 only

1 and 3 only

All of the above

छोटे Courses बड़े Results

Master World Trade Organsiation (WTO)

Prepare through Micro-courses

Try Now

Explanation:

..First statement is correct. Hawala is "money transfer without money movement."
Hawala is an alternative remittance channel that exists outside of traditional banking systems. Transactions between Hawala brokers are done without promissory notes because the system is heavily based on trust.
Second statement is incorrect. India like country made Hawala illegal due to the absence of bureaucracy in the system.
FEMA (Foreign Exchange Management Act) 2000 and PMLA (Prevention of Money Laundering Act) 2002 are the two major legislations which make such transactions illegal.
Third statement is incorrect. WTO don't recognises and supports Hawala.